Rent continues with its upward spiral, considerably outpacing monetary inflation by a large margin. Yields are improving rapidly across the country, thereby incentivising ‘Buy to Let’ purchases. Rental yield growth is certainly outpacing the comparatively low interest rate rises by the Bank of England.
“The unprecedented large and widening spread between mortgage interest rates and inflation continues to incentivize leveraged property purchases,” writes the property website Home in a new statement, citing its official monthly market assessment for the rental and sales sectors.
Leveraged property purchases are being encouraged by the historically huge and growing disparity between mortgage interest rates and inflation. As a result of the sharp surge in London rentals after the pandemic drop-off, the number of newly available rental homes is down 23% today compared to June 2021. The mix-adjusted average rent increase in the UK over the last year is an eye-watering 19.1%.
According to the website, rental homes in the capital are in short supply. The number of new rental units advertised online in the previous 30 days has decreased by 46% compared to the same period last year, resulting in a significant increase in rental price.
“Hackney, Merton, and Lambeth boroughs show the greatest rises in asking rents over the last 12 months, with all three indicating an increase of 42%, which is several times the rate of monetary inflation by any chosen measure,” Home claims.
As investors rush into a sector to offset growing inflation, demand for homes for sale may be rising as well.